PRESENTED BY HASAN MAHMOOD ROLL by jolinmilioncherie

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									PRESENTED BY:
                HASAN MAHMOOD
                ROLL # 23
                M.COM




    DEPARTMENT OF COMMERCE, M.COM
  BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN
     OH GOD OPENS OUR EYES.
    TO SEE WHAT IS BEAUTIFUL
 OUR MIND TO KNOW WHAT IS TRUE,
 OUR HEART TO LOVE WHAT IS GOOD




    Holy Prophet Muhammad (P.B.U.H)
        The greatest social reformer

     TO My Beloved Mother and Father

               Who taught us?
           The first word to speak
          The first alphabet to write


                    And
            First step to talk……



                     To
       All those from whom I learnt
           Who always remains?
                In our heart
Through out the whole span of our life and are
        Nearest, dearest and deepest
                    To us
                    CONTENTS
HISTORY OF BANKING……………………………………1
FUNCTIONS OF COMMERCIAL BANKS…………………3
INTRODUCTION TO NATIONAL BANK………………….7
SENIOR MANAGEMENT…………………………………...8
MISSION STATEMENT……………………………………..10
FEATURES…………………………………………………...11
SERVICES OFFERED BY NATIONAL BANK…………….12
CREDIT DEPARTMENT…………………………………….18
GUIDE LINE OF CREDIT POLICY…………………………20
CREDIT CYCLE………………………………………………21
COLLECTION POLICY………………………………………26
OPERATIONS MANAGEMENT……………………………..28
FOREIGN EXCHANGE DEPARTMENT……………….........33
OTHER RETAIL FUNCTIONS………………………………..40
NBP PRODUCTS……………………………………………….44
SWOT ANALYSIS……………………………………………..46
ATM NETWORK……………………………………………….47
DIRECTOR’S REPORT………………………………………...48
FINANCIAL HIGHLIGHS……………………………………...51
TECHNOLOGY…………………………………………………52
NOTICE OF 55TH ANNUAL GENERAL MEETING………….54
BALANCE SHEET……………………………………………...60
PROFIT & LOSS STATEMENT……………………………..…61
CASH FLOW STATEMENT……………………………………63
 MISSION STATEMENT


To be recognized in the market
place by Institutionalizing a merit
& performance culture, Creating
a powerful & distinctive brand
identity, Achieving top-tier
financial performance, and
Adopting & living out our core
values.



 VISION AND GOALS



 To be the pre-eminent
 financial institution in
 Pakistan and achieve market
 recognition both in the
 quality and delivery of service
 as well as the range of
 product offering
INTRODUCTION
National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business
partner for the Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large network
of branches locally, internationally and representative offices.




We aim to be an organization that is founded on…

      Growth through creation of sustainable relationships with our customers.
      Prudence to guide our business conduct.
      A national presence with a history of contribution to our communities.

We shall work to…

      Meet expectations through Market-based solutions and products.
      Reward entrepreneurial efforts.
      Create value for all stakeholders.




We aim to be peopling who…

      Care about relationships.
      Lead through the strength of our commitment and willingness to excel.
      Practice integrity, honesty and hard work. We believe that these are
       measures of true success.

We have confidence that tomorrow we will be…

      Leaders in our industry.
      An organization maintaining the trust of stakeholders.
      An innovative, creative and dynamic institution responding to the changing needs
       of the internal and external environment
SERVICES OFFERED BY NATIONAL BANK OF
PAKISTAN

INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan
which is proven by the fact that NBP has its branches in all of the major financial
capitals of the world. Additionally, we have recently set up the Financial
Institution Wing, which is placed under the Risk Management Group. The role of
the Financial Institution Wing is :-

      To effectively manage NBP’s exposure to foreign and domestic
       correspondence
      Manage the monetary aspect of NBP’s relationship with the
       correspondents to support trade, treasury and other key business areas,
       thereby contributing to the bank’s profitability
      Generation of incremental trade-finance business and revenues

NBP offers:

      The lowest rates on exports and other international banking products
      Access to different local commercial banks in international banking



 DEMAND DRAFTS                  MAIL                    PAY ORDER *
 If you are looking for a       TRANSFERS               NBP provides another
 safe, speedy and reliable      Move your money         reason to transfer your
 way to transfer money,         safely and quickly      money using our
 you can now purchase           using NBP Mail          facilities. Our pay
 NBP’s Demand Drafts at         Transfer service.       orders are a secure and
 very reasonable rates.         And we also offer       easy way to move your
 Any person whether an          the most                money from one place
 account holder of the          competitive rates in    to another. And, as
 bank or not, can purchase      the market.             usual, our charges for
 a Demand Draft from a                                  this service are
 bank branch                                            extremely competitive.
TRAVELER'S CHEQUE
                 Pak Rupees Traveler’s Cheques are a
Negotiability:
                 negotiable instrument
                 There is no restriction on the period of
Validity:
                 validity
                 At 700 branches of NBP all over the
Availability:
                 country
Encashment:      At all 400 branches of NBP
Limitation:      No limit on purchase
                  NBP Traveler’s Cheques are the safest
Safety:
                 way to carry our money


  LETTER OF CREDIT               COMMERCIAL FINANCE
  NBP is committed to            Let us help make your dreams become a
  offering its business          reality
  customers the widest
  range of options in the        Our dedicated team of professionals truly
  area of money transfer. If     understands the needs of professionals,
  you are a commercial           agriculturists, large and small business and
  enterprise then our Letter     other segments of the economy. They are
  of Credit service is just      the customer’s best resource in making
  what you are looking for.      NBP’s products and services work for them.
  With competitive rates,
  security, and ease of
  transaction, NBP Letters
  of Credit are the best way
  to do your business
  transactions.
FOREIGN REMITTANCES
To facilitate its customers in the area of Home Remittances,
National Bank of Pakistan has taken a number of measures to:      PakRemit™
                                                                  Remit funds
      Increase home remittances through the banking system       from USA to
      Meet the SBP directives/instructions for timely and          Pakistan
       prompt delivery of remittances to the beneficiaries


New Features:

The existing system of home remittances has been revised/significantly improved
and well-trained field functionaries are posted to provide efficient and reliable
home remittance services to nonresident Pakistanis at 15 overseas branches of
the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira,
Saudi Arabia.

      Zero Tariffs: NBP is providing home remittance services without any
       charges.
      Strict monitoring of the system is done to ensure the highest possible
       security.
      Special courier services are hired for expeditious delivery of home
       remittances to the beneficiaries.
SWIFT SYSTEM
The SWIFT system (Society for Worldwide Inter bank
Financial Telecommunication) has been introduced for            NBP
speedy services in the area of home remittances. The          SWIFT
system has built-in features of computerized test keys,      Network
which eliminates the manual application of tests that        Click here
often cause delay in the payment of home remittances.
The SWIFT Center is operational at National Bank of Pakistan with a universal
access number NBP-PKKA. All NBP overseas branches and overseas
correspondents (over 450) are drawing remittances through SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money
for our business and personal needs.


 SHORT TERM                           EQUITY INVESTMENTS
 INVESTMENTS                          NBP has accelerated its activities in the stock market
 NBP now offers excellent rates       to improve its economic base and restore investor
 of profit on all its short term      confidence. The bank is now regarded as the most
 investment accounts. Whether         active and dominant player in the development of the
 you are looking to invest for 3      stock market. NBP is involved in the following:
 months or 1 year, NBP’s rates
 of profit are extremely                     Investment into the capital market
 attractive, along with the                  Introduction of capital market accounts (under
 security and service only NBP                process)
 can provide.
                                      NBP’s involvement in capital markets is expected to
                                      increase its earnings, which would result in better
 N.I.D.A                              returns offered to account holders
 National Income Daily
 Account The scheme was
 launched in December 1995 to
 attract corporate customers. It
 is a current account scheme
 and is part of the profit and loss
 system of accounts in operation
 throughout the country.

          MODE OF
        CALCULATION:
      AVERAGE BALANCE
          DURING A
      CALENDAR MONTH
INTERNATIONAL BANKING


National Bank of Pakistan is at the forefront of international banking in Pakistan
which is proven by the fact that NBP has its branches in all of the major financial
capitals of the world. Additionally, we have recently set up the Financial
Institution Wing, which is placed under the Risk Management Group. The role
of the Financial Institution Wing is :-

      To effectively manage NBP’s exposure to foreign and domestic
       correspondence
      Manage the monetary aspect of NBP’s relationship with the
       correspondents to support trade, treasury and other key business areas,
       thereby contributing to the bank’s profitability
      Generation of incremental trade-finance business and revenues

NBP offers:

      The lowest rates on exports and other international banking products
      Access to different local commercial banks in international banking



 DEMAND DRAFTS                  MAIL                    PAY ORDER *
 If you are looking for a       TRANSFERS               NBP provides another
 safe, speedy and reliable      Move your money         reason to transfer your
 way to transfer money,         safely and quickly      money using our
 you can now purchase           using NBP Mail          facilities. Our pay
 NBP’s Demand Drafts at         Transfer service.       orders are a secure and
 very reasonable rates.         And we also offer       easy way to move your
 Any person whether an          the most                money from one place
 account holder of the          competitive rates in    to another. And, as
 bank or not, can purchase      the market.             usual, our charges for
 a Demand Draft from a                                  this service are
 bank branch                                            extremely competitive.
TRADE FINANCE OTHER BUSINESS LOANS

 AGRICULTURAL FINANCE                      CORPORATE FINANCE
 NBP provides Agricultural Finance         Working Capital and Short
 to solidify faith, commitment and         Term Loans:
 pride of farmers who produce
 some of the best agricultural             NBP specializes in providing
 products in the World.                    Project    Finance    –    Export
                                           Refinance to exporters – Pre-
 Agricultural Finance                      shipment     and   Post-shipment
 Services:                                 financing to exporters – Running
                                           finance – Cash Finance – Small
 “I Feed the World” program, a             Finance – Discounting & Bills
 new product, is introduced by NBP         Purchased      –   Export    Bills
 with the aim to help farmers              Purchased / Pre-shipment / Post
 maximize the per acre production          Shipment Agricultural Production
 with minimum of required input.           Loans
 Select farms will be made role
 models for other farms and                Medium term loans and
 farmers to follow, thus helping           Capital Expenditure
 farmers across Pakistan to
                                           Financing:
 increase production.
                                           NBP provides financing for its
 Agricultural Credit:                      clients’ capital expenditure and
                                           other      long-term   investment
 The agricultural financing strategy       needs. By sharing the risk
 of NBP is aimed at three main             associated with such long-term
 objectives:-                              investments,      NBP    expedites
                                           clients’ attempt to upgrade and
       Providing               reliable   expand their operation thereby
        infrastructure for agricultural    making possible the fulfillment of
        customers                          our clients’ vision. This type of
       Help farmers utilize funds         long term financing proves the
        efficiently to further develop     bank’s belief in its client's
        and        achieve        better   capabilities, and its commitment
        production                         to the country.
       Provide        farmers       an
        integrated package of credit
                                           Loan Structuring and
        with supplies of essential
        inputs,               technical    Syndication:
        knowledge, and supervision
        of farming.
 Agricultural               Credit     National Bank’s leadership in loan
(Medium Term):
                                       syndicating stems from ability to
      Production               and
       development                      Forge strong relationships not
      Watercourse improvement         only with borrowers but also with
      Wells                           bank investors. Because we
      Farm power                      understand        our      syndicate
      Development loans for tea       partners’ asset criteria, we help
       plantation                      borrowers      meet       substantial
      Fencing                         financing needs by enabling them
      Solar energy                    to reach the banks most
      Equipment for sprinklers        interested in lending to their
                                       particular industry, geographic
                                       location and structure through
Farm Credit:
                                       syndicated debt offerings. Our
                                       syndication      capabilities    are
NBP also provides the following
                                       complemented by our own capital
subsidized with ranges of 3
                                       strength and by industry teams,
months to 1 year on a renewal
                                       who bring specialized knowledge
basis.
                                       to the structure of a transaction.
      Operating loans
      Land improvement loans          Cash Management
      Equipment      loans      for   Services:
       purchase of tractors, farm
       implements or any other         With National Bank’s Cash
       equipment                       Management Services (in process
      Livestock loans for the         of being set up), the customer’s
       purchase, care, and feeding     sales collection will be channeled
       of                 livestock    through vast network of NBP
                                       branched spread across the
                                       country. This will enable the
Production Loans:                      customer      to    manage    their
                                       company’s total financial position
 Production loans are meant for        right    from      your    desktop
basic inputs of the farm and are       computer. They will also be able
short term in nature. Seeds,           to take advantage of our
fertilizers, sprayers, etc are all     outstanding range of payment,
covered under this scheme.             ejection, liquidity and investment
                                       services. In fact, with NBP, you’ll
 If you require any further            be provided everything, which
information, please do not hesitate    takes to manage your cash flow
to e-mail us.                          more accurately.
                                  FEATURES
National Bank of Pakistan is an established bank. It has some special features with the
help of those it is growing rapidly.

Outstanding Work Environment
As the work environment plays a great role in this competition age, so the bank has good
work environment. All the people work with co-operation; managers are so kind that each
problem can be discussed with them.

Efficiency
Employees at National Bank of Pakistan are quite efficient. They work more the working
hours and it is all according to their will. It also shows their loyalty, commitment to
organization.

Customer Services
All the customers are entertained individually. Same kind of behavior and attentions is
given to all customers.

Complaint Box
Getting ideas for improvement from the customer side is a new idea and that is working

Employee Benefits

Employees are given the benefits like bonus, gratuity funds, increments, house rents,
medical and conveyance allowances.


Computerized working Environment

In the bank, all the work is done remotely. All the entries are made using the systems
which are internally and externally integrated. This increase efficiency of the bank.
 BRABCH LEVEL HIERARCHY
MAIN BRANCH KHECHARY ROAD
          MULTAN
OPERATIONS DEPARTMENT
Operations department of the National Bank of Pakistan is responsible for the overall
operations of the bank.

Operations department has following segments.
a) Cash
b) Clearing
c) Remittance
d) Account opening
e) Accounts department

The details of those departments that are controlled under operation department are as
under.
a) Account opening
b) Cash department
c) Clearing
d) Remittances

Account opening department
It is the most important department of bank. Following procedure is adopted for this
purpose.



Procedure of Account Opening
It is very simple and quick procedure. A person who wants to open an account must have
the introduction of bank’s staff or an already existing account holder of bank. The
customer is required to fill an account opening form. Then signatures of the Introduce are
verified from S.S. Card before opening account.
They also have to give identity letter
      CNIC copies
      Passport size photograph
Following Factors Prior To Opening of Account
Should Be Consider
  1. The suitability of the perspective customers.
  2. Verification of customer credentials.
  3. The perspective possibility of profitability of the relationship.
  4. The proposed relationship does not violate:
        A. SBP rules and regulations
        B. Applicable local laws
        C. The bank’s internal policies


Current Account
  1. No limitation on frequency or amount transaction
  2. No profit payable


Saving Account
  1. Profit is payable
  2. No of withdraw restricted
  3. Large amount of withdraws requires 10 days.


General Principles
  1. No account will be opened on fictitious name.
  2. All documents necessary required for opening account must be taken after
     verification from original.
  3. No operation of account should be allowed & check book must not be issued until
     all formalities are confirmed.
  4. Genuineness of introduction should be properly ensured.
  5. All information of AOF should be filled at front of concerned officer.
TYPES OF ACCOUNTS
The bank deals in different accounts opening;
   1. Individual Account
   2. Joint Account
   3. Business Account
   4. Partnership Account

SPECIAL TYPES OF ACCOUNTS
These types of accounts only can establish after approval of system and operation
division head office:-
    o Trust Account
    o Account of executors/ administrators
    o Account of liquidators
    o Accounts of local authorities/ municipals.

CHEQUE BOOK ISSUENCE
When the Account is opened, then the customer is given a cheque book to sign upon and
withdraw money.
Cash Department
Cash department of National Bank of Pakistan works under the operation department.
This department is given the complete responsibility of cash, as result of transaction in
touch local and foreign currencies. It is also responsibility for the book keeping of these
transactions and the safe custody of cash. Out of five counters of cash department one
counter is fixing for senior citizens and females. All counters are dealing at the same time
in deposits, withdraw and online transaction processes.

This department performs the main function.
   a) Cash receipts
   b) Cash payments



Clearing Department
Before discussing it is necessary to know what is “Clearing”.

“The process by which cheques exchanged between the collecting and paying bank and
the ensuing financial settlement is called “Clearing”.

This facility is provided by the state bank of Pakistan for offsetting of cross obligations
between the different banks. Clearing is of two types:

   1) Inward clearing
   2) Outward clearing


Accounts Department
   Account department is the most important department of the bank. Because it is
   concerned with:

      Revenue
      Expenses
      Assets
      Liabilities

These are the pillars of any business. In this department, all the vouchers that are posted
during one day are sent to the account department next day. These vouchers are already
posted to computer by the concerned department.
 Types of Account
      Current Account
      Saving Account
      Notice Deposit
      Term Deposit

Remittance department
The need of remittance is commonly felt in today’s business. A major function of any
bank is to “transfer of funds from one place to another place” National Bank of Pakistan
Uses the following modes of transfer of funds.
    Demand Draft
    Telegraphic Transfer
    Pay Order
    Call Deposit
    Pay Slip
    Money transfer



COLLECTION DEPARTMENT
All the cheques under collection are called cheques under collection in National Bank of
Pakistan. There are two types of bills for collection:
     Outward Bills for Collection
     Inward Bills for Collection
FOREIGN EXCHAGE DEPARTMENT
“The transfer of credits to a foreign country to settle debts or account between resident of
home country and those of the foreign country” or “the Foreign bills currencies etc used
to settle such accounts”.

Foreign Exchange department deals within exports imports and Money transfer.
National Bank of Pakistan acts as importer bank as well as exporter bank for different
parties who are interested in the business of export & import.

DEFINE IMPORT
All goods and services brought into a country that were purchased from organizations
located in other countries.

DEFINE EXPORT
All goods and services sent from one country to another country.

Documents required for Export
The person who is exporting goods to the foreign countries requiring the following
documents.
    National tax number
    Registration with export promotion Bureau
    Sales tax registration
    Commercial Invoices
    Bill of Lading
    Packing List
    Bill of exchange
    Promissory Note
    E-Form
    Letter of Credit
    Certificate of origin
    Beneficiary certificate

After compiling the entire task by resident country that is exporting goods in favor of
foreign importer now it will be his turn to make payment.
TYPES OF LETTER OF CREDIT
Importer bank issues a document on request stating that it will pay the exporter when
exporter fulfill the terms of letter of credit. Letter of credit is of two types:



   1. At Usance L/C
   2. At Sight L/C



SIGHT L/C
Requires the importer / importing bank to pay as soon as it receives the clean documents
from exporter.



USANCE L/C
It extends time period (30days, 60days, 90days, 120days, 150days, & 180days).to
importing bank for payment. After specified time period importer have to pay.
Letter of guarantee gives in behalf of person that I will pay in case of default.



SWIFT (Standard world wide inter financial
transaction)
It is the only network. No institute involved among it.
CERTICICATE OF ORIGIN
This certificate shows that goods are from Pakistan.

COVERING SCHEDULE
If in covering schedule, it is given that “Please remit proceed to our Karachi office
account # 574348812 with (Standard Chartered Bank) USA for onward credit to National
Bank of Pakistan.

BENEFICIARY CERTIFICATE
If L/C requires some information as proof of anything from exporter then exporter has to
present beneficiary certificate for that proof.

E-FORM
E-form has four copies:

      One for custom officer
      One for exporter
      Triplicate copy for SBP
      Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom officer should clear
product. (Date is given on the foot form).

PAYMENT FROM IMPORTER BANK
It is the choice of importer to open L/C from any bank and the bank from which L/C is
opened can also refer to some other bank for payment. So bill of exchange is sent to refer
bank and other documents are sent to L/C opening bank.

IMPORTS
L/C is opened by the importer. There are two types of L/C:

   a) Revocable L/C
   b) Irrevocable L/C
NECESSARY REQUIREMENTS
If place of issue and port of loading is different on bill of lading, then along with the
stamp of shipment on board, vessel name and port of shipment is written.

   A. Issue date of bill of lading – shipment on board.
   B. There should not be cutting on bill of lading without authentication.
   C. Bill of lading should show capacity of agent. If bill of lading can be taken by the
      agent of Importer Company, then his name should be mentioned on bill of lading.
   D. Original GSP should be presented.
   E. If TT reimbursement is not acceptable, it means bill of lading is necessary.
   F. When documents are received for export, do enter into lodgment register.

DOCUMENTS FOR IMPORT
         I.    Performa invoice signed by importer
        II.   category pass book copy attested by any bank
       III.   L/C opening application filled in by the customer
       IV.    Importer registration with export promotion bureau
        V.    Annexure
       VI.    Verification of signature by S.S. Card
      VII.    L/C issued on basis of L/C application form
      VIII.   Insurance if covered by buyer
       IX.    Insurance cover note
        X.    Insurance policy
DOCUMENTARY CREDIT
TRADE SERVICE DEPARTMENT
National Bank of Pakistan has his full fledged trade service department. As a credit
instrument and as a means of making as a payment the documentary credit is an essential
instrument for conducting word trade today. A documentary credit represents a
commitment bank to pay the seller of goods or services a certain amount provided present
stipulated documents evidencing the shipment of the goods with prescribed period of
time.
For the cases of imports or exports first the parties have to do upon a sale contract
regarding the term and condition of sale. One method of payment is by L/C which is
secured and now a day mostly uses the business.
Letter of credit is under taking by opening bank that it will make payment if documents
are as per terms of LC.

Four parties are involved in Letter of Credit
    1. Applicant               Importer
    2. Beneficiary             Exporter
    3. Issuing Bank            Bank of importer
    4. Advising bank            Bank of importer
According to import policy, no import is valid without import license which is issued by
the chief controller of import and export or we can say export promotion bureau. If a
person desires to take up import trade must get his name, his firm or his limited company,
registered with EPB. On being granted registration certificate, he will be eligible to
import goods according to import policy. There is no special condition of eligibility for
registration. They only requirement is that he should be a Pakistani and must be
registered with income tax department.

L/C OPENING PROCEDURE
When the importer obtained import license, then bank will open letter of credit. “A letter
of credit is undertaking by LC opening bank to put an agreed sum of money to seller’s
bank of behalf of the buyer of the goods under clearly defined terms and conditions”.
 Pakistani banks open only irrevocable LC. An essential feature of the irrevocable LC is
that it can not be modified, altered, amended, or canceled without the prior consent of all
the parties. Party comes to the bank and fills the form which is provided on the payment
of Rs.100. This form is filled by the party and is return to the bank, it includes details
like.

      Name of company                                Shipment to
      Address                                        Insurance company
      Country of origin                              Shipment from
      Branch name
      Quantity
One thing should also be submit which is INDENT. If the foreign party has any agent they
will issue the indent with following details:
            o To Messer
            o Importers, etc


DOCUMENTS REQUIRED FOR L/C OPENING
When the bank opens L/C, it requires following documents:

    a) Valid import license
    b) Performa invoice
    c) Importer should be Pakistani
    d) Letter of undertaking from importer
    e) Insurance cover.
An important point which the bank will consider before opening of LC is that sufficient funds
be available in the LC opener’s accounts. At the time of establishment the LC the opening
bank generally retains a maximum margin to safe guard its own commitment.
The margin may vary from nil to 100% according to the nature of commodities and it also
depends upon the party. At the item of establishing the LC opening bank charges bank
commission, postage and other charges from the LC opener account. Another main important
point is that value of LC should not increase the value of import license.
After all the documents are being checked and signs are verified by the bank. A sanction slip
is attached with each form so that the approval can be gained from the manager of the bank.
After the approval is made four copies are prepared and the entries are made on the computer
and the printout is taken the margin amount is checked from the importer account and if the
amount is not found then L/C is not opened and the party is informed about the situation. On
the deposit of the margin then L/C is opened LC limit if set by the bank are also checked.
After the LC is opened following entries are made:
     A. LC opening register
     B. Margin / Liability Account Register.

PAYMENT TO SELLER
The negotiating bank upon receiving the documents from the seller checks the documents
according to terms and conditions of credit upon satisfying it self of this the negotiating bank
makes payment to the seller if sight credit. It then forwards the documents to the opening
bank and reimburses it self through the opening banks account with itself.
DOCUMENTS RECEIVED BY THE OPENING BANK
Importer bank or opening bank receives the following documents from the exporter’s bank or
negotiating bank.
    I. Bill of exchange
   II. Invoices
  III. Bill of lading
  IV. Certificate of origin
   V. Packing list
  VI. Insurance
OTHER RETAIL FUNCTIONS OF National Bank of Pakistan

    National Bank offering Advance salary benefits
We all are aware that NBP advance salary is the market leader in Personal Loan category and
is considered the largest Personal Loan Product of the country with loan disbursement of over
Rs.80 Billion. One of the foremost reasons for this astonishing success is the fact that NBP
kept on modifying the product parameters as and when required by keeping an eye on the
changing market conditions and varying competition. The Bank has decided to make
following changes in the product parameters to further improve the operational efficiency and
Turn around Time (TAT) and to increase the disbursement pace.

DOCUMENTS REQUIRED
   1. Borrower must be employee of the Federal /Provincial Government / Semi
       Government / Autonomous body / NBP.
   2. CNIC copies of the borrower
   3. Salary Slip indicating detail of salary of the borrower
   4. Attested copies of CNIC by gazetted officer
   5. Branch has obtained CIB Report of the borrower
   6. Branch has obtained duly signed and stamped BBFS.
   7. Customer written declaration giving details of all financial institutions.
   8. DDO is signature has been verified
   9. Loan will be approved after receipt of at least one salary in account.
   10. The sanctioned amount of Advance Salary Finance doesn’t exceed 20 times.
   11. The expiry of the NBP Advance salary is at least 6-months before retirement.
   12. The repayment period does not exceed 60 months.
   13. Three undated cross cheques in favor of NBP covering full amount of Finance have
       been obtained as security.
   14. All documents have been obtained as per the requirement of NBP Advance salary
       scheme including undertaking as per scheme.
   15. Documents have been recorded in Document Execution Register/ MISC security
       Register.
   16. NBP offers mark-up 15% on principal amount at fixed rate.
   17. There are bi variable rates offered by NBP for this service.
SAIBAAN SCHEME
NBP SAIBAAN DOCUMENTS FOR SALARIED CLASS
        Application form (in original).
        CNIC copies of the applicant.
        Two references CNIC copies.
        Photographs of the applicant(06)
        Employment card copy.
        Appointment letter.
        Service Letter / Certificate.
        Salary cum service certificate.
        Last three Months salary Certificates.
        Branch Account’s statement last six months.
        Last Three Month Utility Bills
        Approved Map
        Original property Documents.
        Aks Sajra.
        Fard Malkiat
        Naqal Intiqal
        Khasra Verification report
        National Evaluation Company’s report.
        PT-I
        Sale Deed/ Registry.
        Processing Fee pay order for Rs.500/=
        Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case of
         Purchase Rs.3000/=
        Processing Fee pay for legal opinion order for Rs.1000/=
        Borrower Basic Facts Sheet
        Confidential Report
        ALICO DECLARATION FORM.
NBP SAIBAAN DOCUMENTS FOR BUSINESS CLASS
     o   Application form (in original).
     o   CNIC copies of the applicant.
     o   Two references CNIC copies.
     o   Photographs of the applicant(06)
     o   Business Related Documents.
     o   Last three years Business Record.
     o   Branch Accounts statement last one year.
     o   Last three month Utility Bills.
     o   ICIL- Department Verification ( Income Estimation)
     o   Approved Map
     o   Registry / Sale Agreement
     o   Aks Sajra.
     o   Fard Malkiat
     o   Naqal Intiqal
     o   Khasra Verification report
     o   NOC
     o   National Evaluation Company’s report.
     o   PT-I
     o   Sale Deed/ Registry.
     o   Processing Fee pay order for Rs.1000/=financing below Rs. 1 Million.
     o   Fee for Evaluator pay order Rs.3000/=financing between Rs. 1 to Rs. 4
         Million.
     o   Processing Fee pay for legal opinion order for Rs.6000/= financing above Rs.4
         Million.
     o   Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case of
         Purchase Rs.3000/=
     o   Borrower Basic Facts Sheet
     o   Confidential Report
     o   ALICO DECLARATION FORM.
SENIOR MANAGEMENT
Amer Siddiqui          SEVP & Group Chief, Retail Banking Group
Dr. Asif A. Brohi      SEVP & Group Chief, Operations Group
Imam Bakhsh Baloch     SEVP & Group Chief, Audit & Inspection Group

                       SEVP & Group Chief, Corporate & Investment
Masood Karim Shaikh
                       Banking Group

                       SEVP & Group Chief, Human Resources
Dr. Mirza Abrar Baig
                       Management & Administration Group
Muhammad Nusrat        SEVP & Group Chief, Treasury Management
Vohra                  Group
                       SEVP & Group Chief, Commercial Banking
Shahid Anwar Khan
                       Group
Ziaullah Khan          SEVP & Group Chief, Compliance Group
Amim Akhtar            EVP & PSO to the President
Ekhlaq Ahmed          EVP & Secretary Board of Directors
Mrs. Khurshid Maqsood EVP & Divisional Head Employee Benefits,
Ali                   Disbursements & Trustee Division
                      EVP/Divisional Head, Special Assets
Nadeem Anwar Ilyas
                      Management Division
Syed Farhan Ahmed      EVP / CFO, Financial Control Divisional
                       EVP & Group Chief, (A) Risk Management
Tahira Raza
                       Group
                       EVP & Group Chief, Overseas Coordination &
Tahir Yaqoob
                       Management Group
                       SVP & Group Chief (A), Information
Atif Hassan Khan
                       Technology Group
                                S Ali Raza
                           Chairman & President




Dr. Waqar Masood Khan        Iftikhar Ali Malik        Syed Shafqat Ali Shah Jamote
       Director                   Director                       Director




  M. Zubair Motiwala      Sikandar Hayat Jamali               Azam Faruque
       Director                 Director                         Director




                              Ekhlaq Ahmed
                        Secretary Board of Directors
DIRECTOR’S REPORT
On behalf of the Board of Directors it gives me great pleasure to present the annual
accounts for year ended December 31, 2002. National Bank made many strides
during 2002 in positioning for the future both operationally and structurally.

To improve customer focus, reduce decision-making layers and promote teamwork.
The bank has substantially restructured its business. An entire layer of controlling
offices i.e. zones has been eliminated and total number of regions enhanced from 9
to 29. A new matrix structure is now in place, which separates the front and back
office with special emphasis on corporate governance and enhanced internal
controls. This process, which was commenced in late 2001, is now fully functional
and demonstrating positive results. The rationalization program for staff reduction
and branch closures was successfully completed in 2002. Going forward the
objective would be to ensure optimum efficiency in staff levels while balancing the
benefits of technology with the branch network.

To meet the challenges of position of NBP as a market leader, training is seen as a
critical success factor. Training has been restructured to make it more need based
and aligned with the corporate vision of inculcating customer focus and developing
core competencies under a program “Gearing up for Excellence “. A strategic training
management plan was developed keeping in view the stakeholders’ expectation. We
are glad to say that while training is a process of continuous improvement, we have
achieved significant results thus far.

To position the bank for capitalizing on the requirements of the relatively lower
banked sectors, a dedicated Commercial and Retail banking group was created.
Within a short span of time a number of retail products have been launched and the
customer response to these schemes has been very encouraging. New retail
products will be offered to cater the large diversified customer base of over 9 million,
the largest in the country. The success of retail banking is critical to maintaining
interest revenue and enhanced fee income. We are confident that with our large
customer base and delivery capabilities, NBP will emerge as a market leader in the
retail/ consumer business in the very near future.

Corporate banking as a dedicated business is being very well received by the
corporate sector. The bank was mandated as a lead manager in significant capital
market transactions. Through a combination of a large direct equity portfolio as well
as a 25% holding in NIT,
 Pakistan’s largest mutual fund, NBP has one of the largest equity portfolios in the
country. Given the strong stock market performance in 2002 attractive trading gains
were realized. This area will continue to be one of our key income contributors as the
capital market gains depth.

NBP continues to be the principal bank for handling the government treasury
business. We have also re-activated our subsidiaries catering to non- banking
financial activities. We are also planning to open stand-alone Islamic Banking
branches. Thus, in combination with our very large and diversified banking base we
are truly a universal bank in Pakistan, in a position to offer the entire range of
banking and financial products. We regard this as our key competitive edge.

NBP is committed to invest in the development of the bank's Information Technology
infrastructure. Several initiatives have been undertaken in this regard. New on line
branches were added. The ATM network is being expanded across the country at
convenient locations and an ATM switch sharing arrangement is being placed. During
the year, the bank signed an agreement with Western Union for expanding the base
for documented remittances. We are also developing a strategic plan for Information
Technology that synchronizes our future growth with product development.

For overseas operations our focus continues to be on trade financing activity to take
advantage of the bank's presence in most countries (16 countries, 20
branches/offices) which are Pakistan's major trading partners. During 2002 we
established a wholly owned subsidiary in Almaty. Currently we are present in four of
Central Asian countries and our unique representation should provide us with a major
competitive edge in the coming years as the Central Asian countries realize their
economic potential.
Financial Performance
In 2002, NBP increased its pre-tax profit to Rs. 6,045 million from Rs. 3,016 million in
2001, an increase of over 100%. The improved profitability was achieved due to a
combination of higher interest revenue, enhanced fee income and run off of the
amortization of the 1997 Golden Handshake Scheme. Prudent addition to loan loss
reserves was made which continues to improve the cash coverage for non-
performing loans.

All key financial and operating ratios demonstrated improvement. Cost/ income ratio
was 0.44 (excluding one off provision of Rs. 832 million for benevolent fund and Rs.
513 million for charge for special separation package) as against 0.52 of the last
year. Pre-tax return on equity was 45.27% as compared to 25.85% of the current
year and is impressive by any yardstick. Pre-tax return on assets improved to 1.43%
as against 0.77% of last year. Capital adequacy ratio of the bank is 14.5%, which is
38% higher as compared to 10.52% of last year.

Deposits of the bank increased by Rs. 12 billion. While there was increase in private
sector loans due to adjustment / repayment of loans by large public sector entities
and substantially lower commodity operations borrowings, advances decreased by
Rs. 30 billion.

Market Recognition
For the second consecutive year, NBP was recognized as the best bank in Pakistan
by the prestigious periodical, “The Banker" UK (a subsidiary of Financial Times
Group). Furthermore M/s JCR-VIS Credit Rating Company Limited maintained its
rating of AAA, while the standalone rating was raised by one notch to AA-, which is
one of the highest in the banking sector.

Future Outlook
going in 2003, the reduction in the interest rate environment will overall have a
negative impact on the financial sector's profitability in the short term. To meet these
challenges we will focus on building our loan portfolio, both on corporate and retail
side. On the retail side focus will be on additional fee business while maintaining
stringent controls over cost. Longer term we will be focusing on those sectors in the
country, which have traditionally received less attention from the financial sector, i.e.
agriculture, small and medium enterprises and of the entire range of retail products.
Our key strength remains our customer base of over 9 million and we are confident
that we are positioned to capitalize on the opportunities.
National Bank of Pakistan
“KAROBAR”
    Under
“President’s Rozgar Scheme”

OBJECTIVE
To launch SUSTAINABLE financial products that are COMMERCIALLY VIABLE for
NBP and the target market i.e. young and unemployed citizens of Pakistan enabling these
citizens to earn at least the minimum wage on a fast track, prudent and transparent basis.

TARGET MARKET
The scheme is offered to:
    1. Eligible young citizens of Pakistan falling within an age group of 18-40 years.
    2. Unemployed Applicant.
    3. Applicant to be residing in the same area/ city for at least 2 years
    4. Applicant having CNIC

FINANICE APPLICATION APPROVAL PROCESS
Finance application approval process can’t be initiated until the satisfactory completion of
following steps:
    a) Completion & checking of documents.
    b) Conformity with eligibility criteria
    c) Availability of References/ Guarantors
    d) Satisfactory credit report i.e. e-CIB
    e) Satisfactory CNIC verification from NADRA
    f) Satisfactory telephonic & physical verification.

National Bank of Pakistan’s product details are given below:
FINANCIAL HIGHLIGHTS                Rs. In million

Authorized Capital                        5,000


Paid-up Capital                           3,730


Shareholders' Equity and Reserves       23,936


Deposits                              362,866


Advances-net                          140,547


Investments-net                       143,525


Total Assets                          432,803


Pre-Tax Profit                            6,054


After-Tax
                                          2,253
Profit


No. of
                  Branch Network          1,204
Branches


No. of Employees                        12,195
SENIOR MANAGEMENT
Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking
                    Group and CFO
Shahid Anwar Khan      SEVP & Group Chief, Commercial & Retail Banking
                       Group

Dr. Asif A. Brohi      SEVP & Group Chief, Operations Group


Muhammad Sardar        SEVP & Group Chief, Audit & Inspection Group
Khawaja

S. M. Rafique          SEVP & Secretary Board of Directors

Imam Bakhsh Baloch SEVP & Group Chief, Compliance Group


                       SEVP & Group Chief, Special Assets Management
Derick Cyprian
                       Group

Amim Akhtar            EVP & PSO to the President


Javed Mehmood          EVP & Group Chief, Risk Management Group

Muhammad Nusrat
                       EVP & Group Chief, Treasury Management Group
Vohra

Nadeem A. Dogar        EVP & Group Chief, Information Technology Group

                       Group Chief, Human Resources Management &
Dr. Mirza Abrar Baig
                       Administration Group

                       Group Chief, Organization Development & Training
Uzma Bashir
                       Group
CORPORATE INFORMATION



 COMPANY SECRETARY

   Ekhlaq Ahmad

 AUDIT COMMITTEE
  Muhammad Arshad Chaudary

  Syed shafqat Ali Shah Jam

   M. Zubair Motiwala

       AUDITORS
 M. Yousaf Adil Saleem & Com

  Chartered Accountants

 Taseer Khalik & com

   Chartered Accountants

      HEAD OFFICE
 NBP Building I.I Chandrigarh

       Road Karachi

    LEGAL ADVISORS
      Mandiwala & zafar

 Advocates & Legal Consultants
SWOT ANALYSIS
During the internship of eight weeks of mine in National Bank of Pakistan, near khechary
chowk Multan, I am going for SWOT Analysis.

Strength

      Bank is believed on customer service. In first week of internship, I worked in Credit
       Department where I learnt how to manage the corporate clients.
      National Bank of Pakistan provides the facility of debit card at minimum rate all over
       the Pakistan.
      National Bank of Pakistan enjoying the large market share in Home financing.
      Home financing and agriculture loans are introduced recently by National Bank of
       Pakistan.
      Branch manager and Chief Manager having good co-ordination with staff to make the
       environment friendly.

Weakness

      National Bank of Pakistan main branch, Multan all time overcrowded.
      Customers are not properly guided to get the benefits of National Bank of Pakistan’s
       facility.
       Online services are changing compare to other competitive banks.
      National Bank of Pakistan main branch Multan still having the shortage of cash and
       deposits counters.

Opportunities

      Banking industry is one of the most growing sectors in Pakistan. So National Bank of
       Pakistan should be continually expanding its network of branches.
      Muslims are consciously differentiating the Islamic-base banking from interest-base
       banking. That is why there is large caution of expansion
      Mobile banking should be started to compete in market.
      Establishing foreign branches.
      All products of Consumer Financing that include home financing, and other products
       should be introduce to all the braches in the cities of Pakistan.
Threats

     National Bank of Pakistan having large networks of hundred branches that play and
      important role in banking business. National Bank of Pakistan compares its working to
      other key players in banking industry.
     Many other banks are now involving themselves in consumer financing at competitive
      rate. This is one of the biggest threats for National Bank of Pakistan consumer
      financing products.
CREDIT DEPARTMENT
    Credit means belief or trust. “The quality of being credible or trustworthy”. Other
    words we can use for credit as “trust in one’s integrity in money matters and ones
    ability to meet payment when due”.

    The earning of National Bank of Pakistan is chiefly derived from interest charge
    and discounts. This department is the revenue generating department. Credit
    department basically has three segments:

         1. Credit marketing department
         2. Credit administration department
         3. Trade finance department

 Advance department deals with extending loans to customers. State Bank of Pakistan
 (SBP) has prescribed regulations which are called “PRUDENTIAL
 REGULATIONS”. Every bank has to follow these regulations. If any bank violates
 the regulations it should be liable for penalties under the core spirit of SBP

 The National Bank of Pakistan limited the credit is extended on the basis of these rules
 and regulations. These regulations tells the terms and conditions under which you can
 extend loans to the borrower and to what extend.




 CREDIT FACILITIES
 At National Bank of Pakistan two types of credit facilities are available

    1) Funded facilities
    2) Non funded facilities
(A) FUNDED FACILITIES
These are the facilities in which there is direct involvement of cash fund.
Following are the funded facilities.

   1)   Current Finance (CF )
   2)   Term Finance ( TF )
   3)   Finance against foreign bills “FAFB”
   4)   Finance against packing and credit “FAPC”
   5)   Finance against imported merchandise “FIM”
   6)   Finance against trust receipt “FATR”
   7)   Payment against document “PAD”

(B)     NON-FUNDED FACILITIES

The facilities where there is no direct involvement of banks fund. Following are
the non-funded facilities.

        1) Letter of credit L/C
        2) Letter of guarantee L/G
GUIDE LINE OF CREDIT POLICY
        Total outstanding financing facilities by banking company to
         single person shall not at any point of time exceed 30% of
         bank’s unimpaired capital.
        No banking company shall make loans or advances against
         the security of its own shares.
        No banking company shall grant unsecured loans/advances on
         the guarantee of
            Any of its directors.
            Family member of director
            Any private company in which banking company is
               interested.

         In arriving at exposure per person weight age of 50% shall
          be given to
               Documentary credit opened by bank.
               Guarantees/bonds other than repayment guarantees.
         In arriving at per party exposure 90% of

               Deposits of party with bank under lien.
               Face value of FIBs lodged by the party as collateral.
               Pak rupee equivalent of face value of special US Dollar
                bonds converted at official rate, FIBs lodged by the
                party as collateral shall be deducted.

         Aggregate exposure of bank against all its clean facility
          shall not at any point exceed the amount of bank’s capital
          and general reserve.
         Advances given to the employees of bank in accordance
          with their accommodation availed by any borrower from
          banks / financial institution does not exceed 10 times of
          capital and reserve of the borrower.
         A borrower who is prepared to inject fresh equity
          irrespective of the fact that its equity is negative is eligible
          to obtain finance from bank to the extend of 10 times fresh
          injected equity.
         No banking company allow financing facilities whether
          fund based / non funded against the shares of companies
          which are not in central depository system.
                          CREDIT CYCLE

                                    REQUEST

        RENEWAL/ RISE

                                              PROCESSING INFORMATION & clp

 MONITORING




                                                           DECISION

DISBURSEMENT OF LOAN




                                                               OFFER




 PURIFICATION OF THE DOCUMENTS




                         WRIT-OFF                   SECURITY
STEP I
Credit cycle start with request letter. When customer gives a request letter to bank that he
want that much amount of credit from bank.

STEP II
When bank receive the request letter form customer. The officer of credit marketing
department make credit line proposal of client. It is essential that the proposal define clearly
the purpose of facility, the source of repayment, the agreed repayment. Schedule, the value of
security and customer relationship consideration implicit in credit division.

The security to be accepted as collateral for the facility and all the documentation relating to
the security of facility must be in the approved from all the procedures and required
documentation must be completed all these things all feed in CLP.

CLP is basically a medium to present proposal for seeking approval of credit line in client. In
CLP they feed complete data of the client that include:

      Credit Limit
      Legal status of company
      History of relationship / introduction with bank
      Line of Business
      Background of proprietor / owner / partner
      Purpose of facility
      Security
      Along with it they include borrower basic fact sheet
      CCA
      Prudential checklist

STEP III
After the processing of information, credit officer decided whether to give credit to that
person or not. They also check whether its security has any market value or not. Decision is
taken by the branch credit committee (BCC ). If the proposal is within the discretionary
powers of committee the proposal may approve after revaluation of credit risk.

It CLP beyond discretionary power of branch credit committee the CLP is sent to credit
division at head office along with supporting documents and recommendation of branch credit
committee.
STEP IV
When decision is made now credit officer offer that we will give you loan up till that limit not
more than that. Up till now credit marketing officer does all the process. After that credit
administration officer’s work start.

Credit administration department basic function is to fulfill the requirement of documents as a
security for credit. Different types of documents are required for pledging, mortgage and
hypothecation.

Documents required for C.F. Hypothecation
Legal stamp documents required:
      Promissory note
      Letter of hypothecation
      Letter of guarantee
      Letter of continuity
      Agreement of finance

   Letters without stamp:
          Letter of arrangement
          Letter of disbursement
          Letter of authority
          SBP regulation undertaking

Documents required for C. F. Pledge
Legal stamp documents required:
      Agreement of finance
      Promissory note
      Letter of guarantee
      Memorandum of deposit of title deed
      Letter of hypothecation
      Letter of continuity
   Letters without stamp:
          Letter of arrangement
          Letter of disbursement
          Letter of authority
          SBP regulation undertaking

Property Documents for Mortgage
                  Legal advice about property documents
                  Title deeds ( Original documents of property )
                  Aux sajra ( Location site map )
                  NEC ( Non-Encompass Certificate )
                  PT 1 in favor of borrower
                  PT 1 in favor of bank
                  Mo TD ( Mortgage of title deeds )
                  Agreement to create mortgage
                  Letters submit to ETOS & register
                  Irrevocable general power of authority ( IGPA )
                  Valuation report

STEP V
Here documents are checked security is properly checked by the value. Value tells the
security. Here following characteristic of security are checked.

      Market value
      Consistency
      Salable
      Storable
      Transferable
      Transportation

STEP VI
On completion of legal documents and security arrangements and receipt of completion
certificate from recognized legal counsel, the bank according to the approved schedule
prepared by bank after obtaining confirmation of other payments have been funds from
sponsors other source viz, equity fund from sponsors release of fund by other co financiers
etc. after the valuation of security the loan is disbursed to customer.
STEP VII
Responsibility lies to branch manager to monitor the overall profit and risk aspect of credit
portfolio in accordance with criteria setout in bank’s credit policy. After the disbursement
credit administration officer monitor the performance of customer whether he is fulfilling the
requirement or not. He is paying markup or not for which purpose he has taken the loan
whether he is utilizing loan for that purpose or not.

STEP VIII
After specific time period credit officer see what customer want whether he wants to renew /
revise or writ off it. If he wants to renew it he said to officer to renew it with same limit.


                                  NBP ATM Network




 Burewala                                                                         Multan
Faisalabad                                                                     Muzaffarabad
Gujar Khan                                                                      Peshawar
Gujranwala                                                                        Quetta
   Gujrat                                                                       Rawalpindi
Hyderabad                                                                      Sheikhupura
Islamabad                                                                         Sialkot
  Karachi                                                                         Taxila
  Lahore                                                                        Wah Cantt.
  Mirpur
NATIONAL BANK OF PAKISTAN’S PRODUCTS


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                  NBP Helpline
                    0800-80080
             from 8:30 am to 10:00 pm
COLLECTION POLICY
The loan officer will be responsible for the collection of finance installments for initial 60 days from the
date of default. After that, the case will be handed over to the collection officer provided by the
Outsourced Collection Agency.
Collection Structure
The country collections Head will manage overall collections. Under the country Head there will be
Regional collections Managers (RCM). The collection officer will directly report to the RCM and
indirectly report to the Branch Manager.
The collection process is to be divided into following four categories:
     Front End
     Mid Range
     Hard Core
     Repossession


Selling Skills
The New Model of Selling
    Selling has changed dramatically over the last few decades, primarily because customers have
     changed
    Customers are far more knowledgeable about products and services available today then ever
     before.
    Competition today is far more stronger than has ever been
    There are far more products and services available to satisfy customers needs then ever before
    Customers are more sophisticated and demanding then they have ever been, for even the smallest
     products
    Acceptance- satisfaction a deep subconscious need of every person
    Acceptance must be established first
    You express your acceptance with unconditional positive regards, no judgment!
    Smile be glad to see him or her
    Agreeability- one of the most desirable qualities in human relation
    Never tell him he’s wrong in his general opinion
    If the issue is unimportant, just let it pass
    If the issue is important, use third party question to avoid appearing argumentative.
SEVEN KEYS TO BUILDING CUSTOMER RELATIONSHIP
          Positive Mental Attitude- the degree to which you are a “Cheerful Person”
          Always look for the good in every person and situation
          Always interpret things positively to yourself
          Smile, relax, be friendly with every one you meet
          Courtesy- the degree to which you are polite and correct in your interaction with others


          Be polite to everyone you meet
          Admiration raises the self esteem of others and builds better relations
          Compliment people on their possessions at home and work
          Compliment people on their accomplishments- their degrees, awards or other form of
           recognition.
          Appreciation-a powerful way to build high quality relationships
          Develop an attitude of gratitude in every thing you do
          Thank everyone you meet for every thing they do for you
          Always say “thank you for your time” to your prospect and your customers
          Send “thank you” notes, cards and gift regularly




TECHNOLOGY
For technology, existing CAMS systems bas been enhanced / modified in the light of the proposed
scheme. The system is centralized and its database is to be maintained at Head Officer level the I.T system
(CAMS) will be lived at all National Bank of Pakistan online branches
IT platform with specific automation and MIS generation capabilities for the scheme, as under:
    o Product type sales i.e. CNG auto Rickshaw, Utility Store & PCO etc.
    o Geographical distribution of loans
    o Processing Turn Around Time
    o Performance evaluation reports on Turn Around Time
    o By Classification of applicant
    o Loan limits
    o Loan tenure
    o Mark-up rate wise
    o Govt. mark-up share collection and loss sharing reports Etc.
ATM FINDER
                               Multan
   S                                       Telephone -
      Branch       Location                              O
  No.                                      061
      Qasim Road   Qasim Road, Multan
   1                                          9200529    O
      Branch       Cantt.
                   Main Branch, Chowk
  2 Main Branch                               9200892    O
                   Hussain Agahi
    Gulgasht
  3               Gulgasht Colony Multan      9210139    O
    Colony Branch
    Chowk Nawan Chowk Nawan Shaher,
  4                                           9200872    O
    Shaher        Multan
NOTICE OF 55 TH ANNUAL GENERAL MEETING

Notice is hereby given that the 55th Annual General Meeting of National Bank of Pakistan, will,
Insha - Allah, be held on Friday, the 30th April, 2004, at 3:00 P.M. (PST) in Crystal Ball Room,
Karachi Marriott Hotel, Abdullah Haroon Road, Karachi.


The following business will be transacted in the meeting:


Ordinary business:

1. To receive and adopt the Audited Accounts of the Bank for the year ended 31st December,
   2003, together with the Directors’ & Auditors’ Reports thereon.


   2. To appoint auditors for the year ending 31st December, 2004 and fix their remuneration.

3. To consider and approve Cash Dividend @ Rs. 1.25 per share i.e., 12.5% and 20% Bonus
   Shares (thereby increasing Paid-up Capital of the Bank from Rs. 4,103,421,850/- to
   Rs.4,924,106,220/-) as recommended by the Board of Directors for the year ended 31st
   December, 2003 (subject to GoP / Regulatory approvals).


   Special Business:
                                                                         Rs.      82,148.50
4. To approve / ratify the following donations aggregating Rs.
   15,651,148.50, recommended / approved by the Bank’s                   Rs. 15,009,000.00
   Management / Board:
                                                                         Rs.      500,000.00
                                                                         Rs.       60,000.00
    Approval for :
    i)     Donation of the sale proceeds of 1414 fractional Bonus
           shares of 2002 to any charitable trust:
    Ratification for :
    ii)    Donation to Prime Minister’s Flood Relief Fund-2003
    iii) One time Grant / Donation to Dr. Muhammad Uzair,
        an ex-employee of former NDFC (merged into NBP):
    iv) Donation to Special Olympics Pakistan :
                                                                               15,569,000.00

                                                                 Total   Rs.
                                                                         15,651,148.50
           (Statement under Section 160 of The Companies Ordinance,1984 is

5.
           enclosed). To transact any other business with the permission of the
           Chairman.

                                                                       By Order of the Board

             Karachi.                                                      (S. Ali Raza)
             Dated: April 08, 2004                                           President




     Note:

     i)    The Share Transfer Books of the Bank shall remain closed from 21-04-2004 to 30-04-2004
           (both days inclusive). Transfers received at Messrs THK Associates (Pvt.) Ltd., Ground
           Floor, Sheikh Sultan Trust Building No. 2, Beaumont Road, Karachi, the Bank’s Registrar
           and Share Transfer Agent, at the close of the business on 20-04-2004 will be treated in time
           for purpose of the entitlement of Cash Dividend / Bonus Shares.


     ii)   A member entitled to attend and vote at the Annual General Meeting is entitled to appoint
           another member as a proxy to attend and vote on his / her behalf. The Government of
           Pakistan and State Bank of Pakistan and any Corporation(s), being member of the Bank,
           may nominate any person as its representative to attend the Annual General Meeting under
           authority of a Power of Attorney or a Board of Directors’ Resolution. Proxies or nominations,
           in order to be effective and valid, must be received at the office of the Bank’s Registrar /
           Transfer Agent, Messrs THK Associates (Pvt.) Limited, Ground Floor, Sheikh Sultan Trust
           Building No.2, Beaumont Road, Karachi, not less than 48 hours before the time of holding
           the Annual General Meeting.The CDC Account Holders and Sub-Account Holders, whose
           Registration details are available in the Share Book Detail Report shall be required to
           produce their respective Original National Identity Cards (NICs) or original Passports at the
           time of attending the Annual General Meeting to facilitate identification. Such Account
           Holders and Sub-Account Holders should also bring / know their respective participant I.D.
           No. and the CDC Account Number. In case of proxy, he/she must enclose an attested copy of
           his / her NIC or Passport. Representative(s) of corporate member(s) should bring usual
           documents required for such purpose.
iii)   Members are requested to timely notify any change in their addresses to the Bank’s
       Registrar / Transfer Agent, Messrs THK Associates (Pvt.) Limited.




Statement Under Section 160 of The Companies Ordinance, 1984

This statement sets out the material facts concerning the Special Business, given in agenda item No. 4 of
           the Notice, to be transacted at the 55th Annual General Meeting of National Bank of Pakistan.

i)     Donation of net sale proceeds amounting to Rs. 82,148.50 of 1414 fractional bonus shares-2002 to
       a charitable trust :

       On the basis of operating results for the year ended December 31, 2002, the Board in its meeting
       held on April 07, 2003, recommended payment of 12.5% cash dividend and 10% Bonus Shares to
       the Bank’s shareholders, which was also approved by the Bank’s shareholders in 54th AGM held on
       May 13, 2003.Accordingly, Dividend Warrants and Bonus Shares were issued to the shareholders as
       per their entitlement. In this connection, 1414 Bonus Shares, being fractional shares, could not be
       distributed to the shareholders. For disposal of these fractional 1414 Bonus Shares a consolidated
       Share Certificate No. 052348 in the name of “Secretary (Board), NBP”, was issued which was sold
       through a member of KSE, Messrs A. Sattar Motiwalla Securities (Pvt.) Ltd., against net sale
       proceeds of Rs.82,148.50 .


       On account of high cost of computer printing, post printing, distribution / postage and handling
       charges of the fractional coupons, the NBP Board in its meeting held on March 26, 2004 recommended
       that the sale proceeds of the fractional Bonus Shares, be donated to a Charitable Trust.In this
       connection, approval of shareholders is now being solicited for donating the net sale proceeds
       amounting to Rs. 82,148.50 of 1414 fractional Bonus Shares – 2002, to a charitable trust, name of
       which will be approved by the President (NBP).

ii)    Donation of Rs. 15.009 million to Prime Minister’s Flood Relief Fund-2003:

       Prime Minister’s Flood Relief Fund-2003 was established under the directives of SBP to help the
       flood affected citizens of Pakistan. An appeal was made by GoP to all Pakistan nationals and
       institutions to contribute generously towards this fund.NBP has been contributing towards such funds
       in the past and in response to the aforesaid call made a donation of Rs.15.009 million, with the
       approval of the Bank’s Operations Committee which was subsequently ratified by the Board of
       Directors in its meeting held on September 13, 2003. The cheque was handed over by the President
       (NBP) to the Prime Minister to help the flood affected citizens of the country.


       The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD Circular
       No. 4 dated February 02, 2000.

iii)   One time grant / donation of Rs. 500,000/- to Dr. Muhammad Uzair, an ex-employee of former
       NDFC (merged into NBP):
  Dr. Muhammad Uzair is a renowned scholar who served in various public sector / autonomous
  organizations for about 30 years. He unfortunately could not earn regular pension. He is over 70 years of
  age and is in dire need of financial assistance.



       In recognition of his meritorious services and contributions in the fields of academics, research
       and economic management, the Prime Minister of Pakistan on the recommendations of Finance
       Minister sanctioned a one time pensionary grant of Rs.500,000/-. As Dr. Uzair has spent nearly
       10 years in the former NDFC (merged into NBP), the Finance Minister requested NBP through
       GoP, Economic Affairs Division’s letter dated September 15, 2003, to make a matching one time
       pensionary grant / donation of Rs.500,000/- to Dr. Muhammad Uzair.


       Accordingly, an amount of Rs.500,000/- was paid to Dr. Muhammad Uzair with the approval of
       the Bank’s Operations Committee which was subsequently ratified by the Board in its meeting
       held on October 17, 2003.

       The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD
       Circular No. 4 dated February 02, 2000.

iv)    Donation of Rs. 60,000/- To Special Olympics Pakistan :

       Special Olympics Pakistan is an international organization dedicated to improving individuals
       with mental disabilities. The organization arranges programmes for children and adults with
       mental retardation for developing improved physical fitness, greater self-confidence and positive
       self-image. They organized a fund raising programme which was held on December 31, 2003
       and requested NBP for participation in the programme.National Bank of Pakistan made a
       donation of Rs.60,000/- for the aforesaid annual fund raising function with the approval of the
       Operations Committee which was subsequently ratified by the Board of Directors in its meeting
       held on January 22, 2004.


       The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD
       Circular No. 4 dated February 02, 2000.
In this respect the following resolution is proposed to be passed, as an Ordinary Resolution:

        “RESOLVED THAT the donation of Rs.82,148.50, being the net sale proceeds of 1414
        fractional Bonus Shares – 2002 to a charitable trust, name of which will be approved by
        the President (NBP), be and is hereby approved.”


        “FURTHER RESOLVED THAT the decisions taken by the Management / Board towards
        approving donations aggregating Rs.15.569 Million, as mentioned below, be and are
        hereby ratified:

i)      Donation to Prime Minister’s Flood Relief Fund-2003                 Rs.      15.009 Million
  ii)   One time grant / donation to Dr. Muhammad Uzair
        an ex-employee of former NDFC (merged into NBP)                      Rs.      0.500   Million
 iii)   Donation to Special Olympics Pakistan :                              Rs.      0.060   Million

                                                           Total:            Rs.     15.569 Million




   The annexed notes 1 to 45 form an integral part of these financial statements.
  S. Ali Raza              Dr. Waqar Masood Khan           Syed Shafqat Ali Shah Jamote       M. Zubair Motiwala
  Chairman & President              Director                             Director                  Director
AUDITORS ’ REVIEW REPORT TO THE MEMBERS

Auditors’ Review Report to the Members on Statement of
Compliance with best Practices of the Code of Corporate Governance



We have reviewed the Statement of Compliance with the best practices (the Statement) contained in
the Code of Corporate Governance (the Code) prepared by the Board of Directors of National Bank
of Pakistan to comply with the Prudential Regulation No. XXIX, responsibil ities of Board of Directors
vide BSD Circular No. 15, dated June 13, 2002, Listing Regulation No. 37 of the Karachi Stock
Exchange, and Chapter XIII of the Lahore Stock Exchange and Chapter XI of the Islamabad Stock
Exchange where the Company is listed.



The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our
responsibility is to review, to the extent where such compliance can be objectively verified, whether
the Statement reflects the status of the Bank’s compliance with the provisions of the Code and report
if it does not. A review is limited primarily to inquiries of the Bank personnel and review of various
documents prepared by the Bank to comply with the Code.


As part of our audit of the financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective audit
approach. We have not carried out any special review of the internal control system to enable us to
express an opinion as to whether the Board’s statement on internal control covers all controls and
the effectiveness of such internal controls.


Based on our review, nothing has come to our attention which causes us to believe that the Statement
does not appropriately reflect the Bank’s compliance, in all material respects, with the best practices
contained in the Code as applicable to the Bank for the year ended December 31, 2003.


M. Yousuf Adil Saleem & Co.                                                Taseer Hadi Khalid & Co.
   The annexed notes 1 to 45 form an integral part of these financial statements.
Chartered Accountants                                                      Chartered Accountants
 S. Ali Raza               Dr. Waqar Masood Khan           Syed Shafqat Ali Shah Jamote         M. Zubair Motiwala
Karachi & President
 Chairman                           Director                                Karachi
                                                                         Director                    Director
B AL AN C E S H E ET
as at December 31, 2003

    2002              2003                                                                  2003            2002
                    '                                                                                        '
    US dollars   in 000                                                       Note                        in 000
                                                                                                   Rupe
                                                                              es
                               ASSETS
     966,294      1,033,967    Cash and balances with treasury banks               6      59,420,502 55,531,453
     624,309        420,301    Balances with other banks                           7      24,154,070 35,878,101
     377,891         525,738   Lendings to financial institutions                  8      30,213,352 21,716,802
   2,497,455      2,891,943    Investments                                         9     166,195,619 143,524,971
   2,445,642      2,801,365    Advances                                       10         160,990,265 140,547,374
     478,332         381,892   Other assets                                   11          21,946,846 27,489,021
     141,210         155,554   Operating fixed assets                         12           8,939,483       8,115,131
                               Deferred tax assets                                                           -


  7,531,133      8,210,760                                                               471,860,137 432,802,853


                               LIABILITIES


     58,567          95,647    Bills payable                                  14           5,496,738       3,365,744
    174,568        287,001     Borrowings from financial institutions         15          16,493,514      10,032,135
  6,314,166       6,883,222    Deposits and other accounts                    16         395,568,490 362,865,637
                               Sub-ordinated loans
                               Liabilities against assets subject to
      1,289             715    finance lease                                  17              41,117          74,051
    516,506        453,821     Other liabilities                              18          26,080,400      29,682,837
     49,526           10,369   Deferred tax liabilities                       13            595,864        2,846,186


  7,114,622      7,730,775                                                               444,276,123 408,866,590

    416,511        479,985     NET ASSETS                                                 27,584,014       23,936,263


                               REPRESENTED BY
     64,912         71,403     Share capital                                  19          4,103,422         3,730,384
    124,317        141,526     Reserves                                                    8,133,312        7,144,326
     59,243        102,616     Unappropriated profit                                       5,897,163        3,404,593
    248,472        315,545                                                                18,133,897       14,279,303
    168,039        164,440     Surplus on revaluation of assets               20          9,450,117         9,656,960


    416,511        479,985                                                                27,584,014       23,936,263


                             Contingencies and commitments                       21
  The annexed notes 1 to 45 form an integral part of these financial statements.
 S. Ali Raza              Dr. Waqar Masood Khan           Syed Shafqat Ali Shah Jamote        M. Zubair Motiwala
 Chairman & President              Director                             Director                   Director
  PROFIT AND LOSS ACCOUNT
  for the year ended December 31, 2003

   2002             2003                                                                            2003                          2002
                          '                                                                                                '
            US dollars in 000                                                           Note                      Rupees in 000


472,030         338,487         Mark-up/return/interest earned                           22             19,452,317        27,126,839
255,766         117,205         Mark-up/return/interest expensed                         23               6,735,579       14,698,507
216,264         221,282         Net mark-up/interest income                                           12,716,738          12,428,332
 31,707           29,317             Provision against non-performing advances            10.3           1,684,777         1,822,154
                                       Provision for diminution in the value of
      366            7,996       investments                                               9.10               459,523          21,031
    1,813            8,261      Provision against off balance sheet obligations           18.1                474,743        104,217
    2,824                       Bad debts written off directly                          10.5.1                               162,276
 36,710          45,574                                                                                     2,619,043       2,109,678
179,554         175,708         Net mark-up/interest income after provisions                               10,097,695      10,318,654

                                NON MARK-UP/INTEREST INCOME
   54,587         56,742        Fee, commission and brokerage income                                        3,260,863       3,137,007
   15,957         19,606        Dividend income                                                             1,126,742         917,020
   11,471         12,367        Income from dealing in foreign currencies                      24             710,726         659,247
      185               2       Share of profit of joint venture                              9.5                 108          10,609
    8,443         37,408        Other income                                                   25           2,149,800         485,209
 90,643         126,125         Total non mark-up/interest income                                           7,248,239       5,209,092
270,197         301,833                                                                                    17,345,934      15,527,746

                                NON MARK-UP/INTEREST EXPENSES
                                Administrative expenses
   79,406         82,852        Salaries and allowances                                                     4,761,408          4,563,326
   28,354           4,883       Charge for defined benefit plans                                              280,632          1,629,445
    8,928           5,109       Provision for voluntary handshake scheme                                      293,612            513,073
   42,318         42,999        Other administrative expenses                                  26           2,471,083          2,431,935
159,006         135,843                                                                                     7,806,735          9,137,779
     55             582         Other provisions/write offs                                                    33,454              3,134
    415             398         Other charges                                            27                    22,894             23,874
159,476         136,823         Total non mark-up/interest expenses                                         7,863,083          9,164,787
110,721         165,010                                                                                     9,482,851          6,362,959
  5,536           8,250         Staff Welfare Fund                                                            474,143            318,148
                                Extra ordinary items
105,185         156,760         Profit before tax                                                            9,008,708         6,044,811
   46,112          80,914       Taxation - Current                                             28            4,650,000         2,650,000
   17,401          25,048                  - Prior year(s)                                                   1,439,444         1,000,000
    2,461        (22,252)                  - Deferred                                                      (1,278,839)           141,426
 65,974          83,710                                                                                      4,810,605         3,791,426
 39,211          73,050         Profit after tax                                                             4,198,103         2,253,385
   13,089          59,243       Unappropriated profit brought forward                                        3,404,593           752,226
                                Transfer from surplus on revaluation of fixed assets:
  24,592                           Prior year(s)                                                                               1,413,246
     877             833           Current year                                                                47,890             50,411
38,558           60,076                                                                                    3,452,483           2,215,883
77,769          133,126         Profit available for appropriation                                         7,650,586           4,469,268
                                Appropriations
                                Transfer To:




  (3,921)          (7,305)         Statutory reserve                                                        (419,811)          (225,339)
                                   Capital reserve
                                   Revenue reserve
   (6,491)    (14,280)      Reserve for issue of bonus shares @ 20% (2002: 10%)    (820,684)     (373,038)
                            Proposed cash dividend Rs. 1.25 per share
   (8,114)      (8,925)     (2002: Rs 1.25 per share)                               (512,928)     (466,298)
(18,526)     (30,510)                                                             (1,753,423)   (1,064,675)
59,243       102,616      Unappropriated profit carried forward                     5,897,163     3,404,593

    0.09         0.18     Basic/diluted earnings per share (Rupees)         30         10.23          5.49
CASH FLOW ST ATEMENT
for the year ended December 31, 2003

   2002                       2003                                                           2003              2002
                '
  US dollars in 000                                                                 Note                      Rupees
                                                                                                                 '
                                                                                                              in 000

                    CASH FLOW FROM OPERATING ACTIVITIES
  105,185           156,759         Profit before taxation                                  9,008,708       6,044,811
   15,957   19,606     Less: Dividend income                                                 1,126,742         917,020
    89,228 137,153                                                                           7,881,966       5,127,791
                      Adjustments for non-cash charges
    8,557      6,728 Depreciation                                                              386,662         491,764
   31,707    29,317 Provision against non-performing advances                                1,684,777       1,822,154
       366     7,996 Provision for diminution in the value of investments                      459,523           21,031
     1,813     8,261 Provision against off balance sheet obligations                           474,743         104,217
     8,928     5,109 Provision for voluntary handshake scheme                                  293,612         513,073
       (84)      (132) (Gain) on sale of fixed assets                                           (7,568)         (4,833)
      162        219 Financial charges on leased assets                                         12,584            9,361
         55      582 Other provisions/ write off                                                33,454            3,134
     (185)         (2) Share of (profit) of Joint Venture                                         (108)        (10,609)
    51,318  58,078                                                                           3,337,679       2,949,292
   140,546 195,231                                                                          11,219.645       8,077,083

                             (Increase)/decrease in operating assets
  (132,872) (182,649)         Lendings to financial institutions                           (10,496,550)     (7,635,970)
     6,682     (1,762)        Held-for-trading securities                                     (101,263)         383,984
   498,950 (385,040)          Advances                                                     (22,127,668)     28,673,903
    61,339     80,533         Other assets                                                    4,628,100       3,525,063
   434,099 (488,918)                                                                       (28,097,381)     24,946,980
                             Increase/(decrease) in operating liabilities
    19,496   37,081           Bills payable                                                   2,130,994       1,120,395
  (25,280)  112,433           Borrowings from financial institutions                          6,461,379     (1,452,828)
  230,537   569,057           Deposits                                                      32,702,853      13,248,569
   24,887    (74,115)         Other liabilities                                             (4,259,266)       1,430,240
   249,640 644,456                                                                          37,035,960      14,346,376
   23,261    (90,736)        Income tax (paid)/received                                     (5,214,439)       1,336,778
 (105,044)    (5,172)        Special separation package cost paid                             (297,239)     (6,036,703)
     (162)      (219)        Financial charges paid                                             (12,584)         (9,361)
  (81,945) (96,127)                                                                         (5,524,262)    (4,709,286)
   742,340 254,642            Net cash flows from operating activities                      14,633,962      42,661,153

                             CASH FLOW FROM INVESTING ACTIVITIES
(1,078,416)     (423,058)    Net investments in available-for-sale securities              (24,312,528)    (61,974,971)
   (55,963)        (1,362)   Net investments in held-to-maturity securities                     (78,276)    (3,216,109)
    15,957        19,606     Dividend received                                                1,126,742         917,020
    (2,800)      (10,172)    Investments in operating fixed assets                            (584,586)       (160,935)




    (5,509)     (4,539) Investments in subsidiaries, associates and joint venture             (260,876)       (316,597)
        279         275 Sale proceeds of property and equipment disposed off                     15,799          16,007
(1,126,452) (419,250) Net cash (used) in investing activities                              (24,093,725)    (64,735,585)

               CASH FLOW FROM FINANCING ACTIVITIES

    (8,114)           (8,071) Dividend paid                                                   (463,814)       (466,298)
      (517)             (573) Payments of lease obligations                                    (32,934)        (29,715)
    (8,631)  (8,644) Net cash (used) in financing activities                           (496,748)      (496,013)
      2,696         2,115       Effects of exchange rate changes on cash and cash        121,529        154,959
 (390,047) (171,137) Decrease in cash and cash equivalents             equivalents   (9,834,982)   (22,415,486)
2,031,182 1,641,135 Cash and cash equivalents at the beginning of the year           94,313,554    116,729,040
 1,641,135 1,469,998    Cash and cash equivalents at the end of the year       31    84,478,572      94,313,554
STATEMENT OF CHANGES IN
EQUITY for the year ended
December 31, 2003
      Share                                                            Exchange Reserve for Statutory General Unappropriated
        Capital                                                         Equalization issue of Reserve                  Total
                            Reserve                                                  Reserve     Profit
                                                                                               Bonus Shares
                      …………………… ...................................................................................................……… Rupees in '000
                             …………………… .................................................................................................. ………


Balance as at December 31, 2001                 3,730,384         3,109,488            -       3,845,237         521,338       752,226         11,958,673

      Profit after taxation for the year
                                                                                                                               2,253,385 2,253,385
      ended December 31, 2002 ----------------------------------------------------------------------------------------------------
 Transfer to statutory reserve                                                                                                   (225,339)   -
 -------------------------------------------------------------------------------------------------------------------------225,3 (466,298) (466,298)
 Proposed cash dividend ------------------------------------------------------------------------------------------------------------
 39 ---------------------------------------------------------------------------------------------------------------------
 Transferred to reserve for
  issue of bonus shares                                -                 -            373,038            -               -       (373,038)   -
 Exchange adjustments on
    revaluation of capital
    of foreign branches                                -              243,396             -             -                -          -       243,396
 Transfer from surplus on revaluation
  of fixed assets - incremental
  depreciation
  - prior year(s) -------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  1,413,2461,413,246
                                                                                                                                   50,411 50,411
  - current year - net of tax ----------------------------------------------------------------------------------------------------------
 Deferred tax liability recognized
    on exchange equalization reserve              -          (1,173,510)            -             -                -               -     (1,173,510)

 Balance as at December 31, 2002                3,730,384         2,179,374       373,038       4,070,576      521,338         3,404,593 14,279,303


 Profit after taxation for the year
                                                                                                                                  4,198,103
     ended December 31, 2003 ------------------------------------------------------------------------------------------------------             4,198,103
 Transfer to statutory reserve                                                                                                    (419,811)        -
  ------------------------------------------------------------------------------------------------------------------------- 419,8
 Issue of bonus shares                              373,038               -                                                           -
                                                                                     (373,038) --------------------------------------------
 11 ---------------------------------------------------------------------------------------------------------------------         (512,928)
 Proposed cash dividend ------------------------------------------------------------------------------------------------------------            (512,928)
 Transferred to reserve for
   issue of bonus shares                                -                  -          820,684              -              -       (820,684)        -
 Exchange adjustments on
   revaluation of capital
   of foreign branches                                  -              186,968             -              -               -           -           186,968
 Transfer from surplus on revaluation
   of fixed assets- incremental
   depreciation ---------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      47,890       47,890

 Deferred tax liability recognized
  on exchange equalization reserve                   -              (65,439)          -             -              -               -              (65,439)

 Balance as at December 31, 2003                4,103,422        2,300,903        820,684      4,490,387       521,338       5,897,163         18,133,897
     1. STATUS AND NATURE OF BUSINESS

      National Bank of Pakistan (the bank) was established under the National Bank of
      Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. Its
      registered and Head Office is situated at I.I. Chundrigar Road, Karachi. The bank is
      engaged in providing commercial banking and related services in Pakistan and overseas.
      The bank also handles treasury transactions for the Government of Pakistan (GoP) as an
      agent to the State Bank of Pakistan (SBP). The bank operates 1,183 (2002: 1,189)
      branches in Pakistan and 16 (2002: 15) overseas branches (including the Export
      Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides services
      as trustee to National Investment Trust (NIT) including safe custody of securities on
      behalf of NIT .

2.     BASIS OF PRESENTATION

      In accordance with the directives of the Federal Government regarding the shifting of the
      banking system to Islamic modes, SBP has issued various circulars from time to time.
      Permissible form of trade related mode of financing includes purchase of goods by the
      bank from their customers and immediate resale to them at appropriate mark-up in price
      on deferred payment basis. The purchases and sales arising under these arrangements
      are not reflected in these accounts as such but are restricted to the amount of facility
      actually utilized and the appropriate portion of mark-up thereon.

      US dollar equivalent

      The US dollar amounts shown on the balance sheet, profit and loss account and cash
      flow statement are stated as additional information solely for the convenience of readers.
      For the purpose of conversion to US Dollars, the rate of Rs 57.4685 to one US Dollar has
      been used for both 2003 and 2002 as it was prevalent rate as on December 31, 2003.

3.     STATEMENT OF COMPLIANCE

      These financial statements are prepared in accordance with approved accounting
      standards as applicable in Pakistan and the requirements of the Companies Ordinance,
      1984 and the Banking Companies Ordinance, 1962. Approved accounting standards
      comprise of such International Accounting Standards as notified under the provisions of
      the Companies Ordinance, 1984. Wherever the requirements of the Companies
      Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the
      Securities and Exchange Commission of Pakistan (SECP) and the State Bank of
      Pakistan (SBP) differ with requirements of these standards the requirements of the
      Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or the requirements
      of the said directives take precedence.
      The SECP has approved the adoption of International Accounting Standard 39, Financial
      Instruments: Recognition and Measurement and International Accounting Standard 40,
      Investment Property. The requirements of these standards have not been taken into




      account for the purpose of these financial statements as the implementation of the said

      standards have been deferred by SBP, vide BSD circular number 10 dated August 26,
      2002, for banks in Pakistan till further instructions. However, investments have been
      classified in these financial statements in accordance with the format of financial
      statements for banks issued by SBP vide BSD circular No. 36 dated October 10, 2001.
      Consolidation
     The bank accounts for its investments in associates and subsidiaries at cost, except for
     quoted associates which are valued at market rates prevailing at reporting date. The
     details of these investments are given in notes 9.4 and 9.6.

                                                                        '
     The bank considers that the effect of consolidation of subsidiaries financial statements
                                              '
     will not have any material impact on bank s financial position or results and accordingly
     consolidated financial statements have not been prepared. The SECP has granted
     exemption to the bank from the requirements of sub section (1) of section 237 of the
     Companies Ordinance, 1984 vide its letter No. EMD/CO/233/627/2003-1164 dated
     August 5, 2003.




Technology
For technology, existing CAMS system has been enhanced / modified in the light of
the proposed scheme. The system is centralized and its database is to be maintained at
Head Office level. The I.T system (CAMS) will be lived at all NBP online branches.

IT platform with specific automation and MIS generation capabilities for the scheme,
as under:
     Product type sales i.e. GNG auto Rickshaw, Utility Store & PCO etc.
     Geographical distribution of loans
     Processing Turn Around Time
     Performance evaluation reports on Turn Around Time
     By classification of applicant
     Loan limits
     Loan tenure
     Mark-up rates wise
     Govt. mark up share collection and loss sharing reports etc

								
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